Sunday, December 18, 2011

My Favorite Mistake*

When you think about it, most business books fall into either the "inspirational" or the "how-to" categories.

The tone is relentlessly optimistic, laying out one five-point plan after another for how entrepreneurs can duplicate the success of Amazon, Google or Wal-Mart, all within a couple of years and funded by chump change.

But maybe a more useful program for success would simply involve studying failure. It turns out that few people ask why companies go under, or systematically study failure. There's just not much market - or much "ca-ching" - associated with that topic.

There is a new entry in the thin ranks of "mistake literature," however. It's "Brilliant Mistakes: Finding Success on the Far Side of Failure," by Paul Schoemaker (Wharton Digital Press). And as part of the book launch, the publisher is holding a contest to pick the best "mistakes that jumpstarted success."

So true. The other side to this, that's almost never mentioned, is that many/most failures are unnecessary. Companies learn the reasons for those mistakes.....afterwards, when they could uncover them beforehand - with some research.

Due diligence includes information that the business doesn't think about that could result in failure or poor results. Market intelligence uncovers reality which is always changing and usually includes perspective that the executive hadn't considered.

Last point: mistakes provide opportunities for others who want to know potential problems or threats.

The most common reason for failure in that book was over-reaching. The company that was successful in one arena decided to try to do something outside their "wheelhouse" and they over-extended themselves into a market where they were unfamiliar and failed, bringing down the whole company.

The main problem was that the CEO would get a "vision" for a new business line and even though others in the company knew it was not a good idea, everyone was afraid to contradict him (and yes, it's usually a "him").